Commission presented with FY26 budget proposal that recommends 2% millage cut, draws on fund balance for capital

City budget staff presented a proposed fiscal year 2026 budget on July 10 that recommends a 2% cut in the property tax rate and continued use of fund balance to pay for capital projects. Bob Anathin, the city's budget administrator, said the recommended rate is 8.9797. "We've recommended a 2% reduction in millage rate to 8.9797," Anathin said during the workshop.

The proposal relies on one-time reserves to cover a portion of next year's capital plan. Anathin told commissioners the city will use fund balance for capital and that, as presented, the budget anticipates using roughly $11 million of fund balance in FY26. "By the time we get to FY2026...we have a funding of 68,000,000 and an expenditure of 80,000,000, which says we're going to use another $11,000,000 of fund balance," he said.

Why it matters: commissioners were warned the city has drawn down reserves in recent years to pay for major projects and that continued reliance on fund balance leaves less cushion for future capital needs. Anathin said the city began the prior year with a $35 million fund balance, expected to use about $13 million in FY25 and to close FY25 with roughly $22 million. He identified a roughly $10 million minimum target as prudent going forward.

Supporting details: the proposed FY26 operating revenue was shown at about $68 million and expenditures at about $80 million, leaving projected use of fund balance to cover capital and one-time items. Anathin said the general fund will have reduced ability to transfer money to the capital improvement program and urged commissioners to consider trade-offs between operating spending and capital spending.

Discussion and direction: commissioners asked staff for backup detail on line items labeled "other" across divisional budgets; Anathin said that detail is included in the backup and offered to flip to those pages on request. Commissioners also raised the timing of a second workshop and the legal submission deadlines: Anathin reminded the body that a budget must be submitted to the state by July 31 and that the state will review and respond in August.

Next steps: staff will provide the detailed line-item backup for divisional "other" accounts and will return with additional information at a second workshop. The proposed millage and fund-balance assumptions remain recommendations until the commission adopts a final budget and millage.